Rocketing prices mean it now takes the average Irish household 16 years’ income to afford an apartment, an EU study has found.
Irish homebuyers are second only to Malta, where it takes more than 20 years to save enough for a 100-square-metre apartment. Luxembourg is third on the list, at 14 years.
The study, carried out by the European Commission’s economics directorate, found that housing affordability in the 19-country eurozone has been tumbling since 2013, when house prices began to rise following the 2008 crash.
Irish house prices have seen cumulative growth of close to 100pc between 2013 and 2021, the third-fastest rate in the eurozone after Estonia and Luxembourg, and compared to a eurozone average of 40pc.
Headline inflation in the period was around 10pc.
“As a result of these years of increase, house prices in the euro area are now higher than at the outbreak of the global financial crisis in 2008,” the study says. “House prices are now overvalued in over half of the euro area countries.”
According to the study, however, Irish house prices are technically “undervalued” due to statistical skews from the pre-2008 boom and subsequent bust.
Irish prices have risen substantially since the third quarter of last year, when the study ended.
Central Statistics Office data shows residential property prices shot up by 13pc in the year to July and are now 0.8pc above their peak during the Celtic Tiger property bubble in April 2007, although they slowed compared to previous months.
But the Banking and Payments Federation of Ireland says prices are likely to continue to increase in the coming months due to a lack of supply.
Budget 2023 extended the help-to-buy scheme for first-time buyers of new homes and increased funding for the State’s Housing for All home-building plan.
The Government hopes a €500 tax credit for renters will help with soaring rents, which have grown at the third-fastest rate in the EU over the last decade.
A recent report by the European Systemic Risk Board said limits on the amount cuckoo funds can borrow to fund real estate development could help to cool rent rises. Property groups have complained the Budget did not address high taxes on small landlords.